Why is the Lynas (ASX:LYC) share price so volatile?

Shares in the rare earths miner are trading within an extremely wide range lately.

| More on:
Scared people on a rollercoaster holding on for dear life, indicating a plummeting share price

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Lynas Rare Earths Ltd (ASX: LYC) share price has been on a rollercoaster ride recently.

Shares in the rare earths miner are trading within an extremely wide range of late.

Let's take a closer look at why the Lynas share price is so volatile.  

What's been happening with the Lynas share price?

Shares in Lynas have been all over the place in September. Since the start of the month, the company's share price has soared by as much as 17% to hit a high of $8.05 on 16 September.

Today, shares in Lynas are trading at $6.65, which is 3.4% lower for the month. Given the company did not release any price-sensitive news during September, this price action reflects just how volatile the Lynas share price is.

Why is the price so volatile?

Lynas is a producer of rare earths metals, which are an essential component of the functioning of our modern-day lives.

As a result, Lynas is essentially a resources company that relies on the production and sale of commodities.

Since commodities are dictated by their own spot prices, Lynas is therefore considered a 'price taker'. That means its share price is at the mercy of the ebb and flow of the individual spot prices of rare earths metals.

Recently, weakness in the Lynas share price has been driven by weakness in commodity prices.

Commodites have felt the pain following concerns over the Chinese economy. The neodymium price, in particular, has been a poor performer putting pressure on the Lynas share price.

More on the Lynas share price

Although shares in Lynas have suffered this month, they are 59% higher year to date.

Bullish sentiment towards the rare earths miner was reflected in the company's full-year results in late August. Lynas revealed a record result, highlighted by a 60% increase in revenue to $489 million.

Other highlights of the company's full-year report include:

  • Net profit after tax (NPAT) of $157.1 million compared to a loss of $19.4 million the previous year
  • Earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $235.3 million, up from $59.7 million in FY20
  • Cash and cash equivalents as at 30 June of $680.8 million compared to $101.7 million in the prior year

Over the past five years, Lynas shares have risen by 1,130%.

Should you invest $1,000 in Lynas Rare Earths Ltd right now?

Before you buy Lynas Rare Earths Ltd shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Lynas Rare Earths Ltd wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Resources Shares

Three miners wearing hard hats and high vis vests take a break on site at a mine as the Fortescue share price drops in FY22
Resources Shares

Did you catch what happened with the big 3 ASX 200 mining stocks in April?

BHP, Rio Tinto, and Fortescue all reported their latest mining results in April.

Read more »

Miner looking at a tablet.
Resources Shares

After its earnings result, what's Macquarie's price target on Fortescue shares?

Let’s dig into what Macquarie thinks of Fortescue after its quarterly update.

Read more »

Two mining workers on a laptop at a mine site.
Resources Shares

The Mineral Resources share price is down 72% in a year. Time to pounce?

Two top experts ran their slide rules over Mineral Resources shares. Here’s what they found.

Read more »

Miner looking at a tablet.
Resources Shares

Mineral Resources share price shoots 15% higher on third-quarter report

The ASX 200 iron ore and lithium giant has released its 3Q FY25 activities report.

Read more »

Image from either construction, mining or the oil industry of a friendly worker.
Resources Shares

Why Macquarie says this ASX 200 mining stock could rocket 67% in a year

Macquarie forecasts a big potential rebound for this diversified ASX 200 miner.

Read more »

Female miner smiling at a mine site.
Resources Shares

3 reasons why the Fortescue share price could still be a buy

Here’s why I view Fortescue as an opportunity.

Read more »

A man wearing a hard hat and high visibility vest looks out over a vast plain where heavy mining equipment can be seen in the background.
Resources Shares

Here's the latest earnings forecast out to 2029 for Rio Tinto shares

Let’s unearth what this mining giant is predicted to achieve.

Read more »

Female miner smiling in front of a mining vehicle.
Resources Shares

Is the BHP share price a buy? Here's UBS' view

Let’s dig into what an expert thinks of this mining giant.

Read more »